Mr. Powell expressed satisfaction with moves Mr. Arafat has made since a television speech Sunday vowing to curb extremists staging attacks from areas under his control. But State Department spokesman Richard Boucher said the Palestinian leader was told he must complete the crackdown by "dismantling" anti-Israel terrorist cells. If he follows through, the spokesman stressed, Israel should be ready to reciprocate with steps to ease the everyday lives of Palestinians.

"It's important that Israelis work to alleviate the pressures on the Palestinian people, especially restrictions that impose real hardships and make day-to-day living difficult," said Mr. Boucher. "But we continue to put the primary emphasis today on the efforts by Chairman Arafat to effectively, decisively and in a sustained manner deal with the causes of violence."

U.S. envoy Anthony Zinni - home for the holidays after a three-week effort to get a Middle East cease-fire - is expected to meet Secretary Powell in a few days to discuss a resumption of his mission.